Introduction

An import means getting goods into one country from another country in an appropriate
method, typically for use in trade. Imports of goods and services are provided to domestic
consumers by foreign producers. Imports play vital role in enhancing exports, these imports
could be in the form of raw materials or machineries; both are used in the manufacturing
sector. It is expected that imports of consumer goods have direct contemporaneous
association with exports, while imports of capital goods affect exports with two period lags
because machinery imported by the producers first setup and then start production, therefore,
it starts impacting exports. Major import of Pakistan is Petroleum and petroleum products,
Edible oil, Chemicals, Capital goods, Industrial raw materials Iron, Steel and Aluminum,
Consumer products, Agriculture Machinery, Textile Machinery, fertilizers.
• Pakistan imports for 2019 was $56.53B, a 10.46% decline from 2018.
• Pakistan imports for 2018 was $63.14B, a 17.82% increase from 2017.
• Pakistan imports for 2017 was $53.59B, a 19% increase from 2016.
• Pakistan imports for 2016 was $45.03B, a 2.38% decline from 2015.
Facts
Pakistan’s trade deficit has hit a record level of 30 billion US dollars in the first 11 months of
2016-17, showing a jump of 42 per cent as compared to the same period in the previous
financial year. Exports have declined by three per cent to 18.5 billion US dollars while imports
have gone up by 21 per cent to 48.5 billion US dollars.Never before in the country’s history
have imports been over two-and-a-half times of exports as they are now. This unprecedented
trade deficit has occurred despite the prevalence of relatively low international prices of our
biggest import, oil.The government attributes the decline in exports to the stagnant volume of
world trade and low commodity prices in global markets. But our exports have been falling
since 2013-14 (after attaining the peak level of 25 billion US dollars a year earlier) much before
world trade slowed down and commodity prices fell.
Additionally, non-oil commodity prices have partially recovered after falling towards the end of
2015 and the year 2016 has witnessed a 12 per cent increase in the value of global trade. Some
other countries, such as Bangladesh and Vietnam, have performed well in this improved global
trade environment.The reasons why Pakistan’s exports have declined by 20 per cent since
2013-14 include a number of structural factors and wrong policies. Unlike East Asia, Pakistan
has historically followed a policy of import substitution rather than export
promotion.Consequently, there has been little emphasis on broadening the export base that
has remained over-reliant on textiles as the principal export. Even now, exports of cotton yarn,
cloth and value-added textiles constitute almost 60 per cent of our total exports.Exports of
other items have taken a big hit in the last three years, the decrease in them ranging from two
per cent to 22 per cent. Many of these exports are from the agricultural sector or by small and
medium enterprises.Unfortunately, these sectors have been neglected through overtaxation of
inputs, lack of access to infrastructure, especially electricity and gas, and restricted availability
of credit from commercial banks. Extraordinary skills of Pakistani craftspersons, therefore, have
remained largely unrealised. In India, on the other hand, exports of precious stones and
jewellery lone now earn more than twice the total export earnings of Pakistan.Since 2014, our
exports have floundered because they can no longer compete in the international market due
to an overvalued rupee and the relatively high cost of inputs like electricity. We need to realise
that the loss of buoyancy in world trade has led to a low-intensity trade war being waged
through competitive devaluations of currencies.

Most Asian currencies have fallen by anywhere between eight per cent and 84 per cent.
Pakistan, instead, has opted to maintain a relatively stable value of the rupee, with only five per
cent nominal depreciation over the last year. In reality, the rupee has appreciated recently
because of its link to the strengthening American dollar.Explaining the rapid growth in imports
in 2016-17, the government has stated that this is largely due to the upsurge in machinery
imports, especially for projects related to the China-Pakistan Economic Corridor (CPEC).Home
remittances and money sent back by Pakistanis working abroad have financed the bulk of
Pakistan’s trade deficit for the last many years.This is only partially true. Up to April, the rise in
the CPEC linked imports accounted for 38 per cent of the total increase in imports. Other major
contributors to the increase are food, petroleum, automobiles and other intermediate goods.
Consequently, many import-substituting industries within Pakistan have been unable to
compete and the volume of major imports has gone up by anywhere between 18 and 56 per
cent for different items. Such big increases are unprecedented for many imports.

The composition of Pakistan’s imports continues to be inelastic, the top 10 imports contributed
nearly 69% of total imports:

Abstract
The objective of the present paper is to inspect the impact of the Pakistan’s free trade
agreements with other nations on Pakistan economy and foreign trade. It also deals with the
essential questions of: can the expansion of FTAs with other nation benefit Pakistan and trade
model of Pakistan’s existing economy? Will trade liberalization under an FTA with a
neighboring country like China and Iran spur Pakistan’s Foreign trade and development?
Looking at trends and trade patterns of Pakistan, the potential of Pakistan’s accessible
economy is analyzed to improve interregional trade and export diversification by
supplementary deepening outlines a number of recommendations to take out the maximum
advantage for Pakistan’s economy from these freshly signed FTAs with other economic
partners.

Methodology
To evaluate Pakistan’s overall tread with top trading partners and FTAs with other nations and
their trade performances (merchandise imports and exports) data from 2009 to 2013 has been
used to analyze Pakistan’s overall trade with top trading partners also Pakistan’s FTAs with
other nations. The trade data utilized in this study is at HS-2 digit level for the calculation of
overall trade performances under concession-wise multiple tracks offered under the FTA, the
top ranked products from the earner’s and loser’s end, and calculation of Pakistan’s export
competitiveness with FTA partners. The study of international trade is a branch of Economics
and in response to increased economic interdependence and other profound changes in the
international system during the last few decades, the analysis of international trade have
developed in new directions. Case study is a qualitative method that social scientists, in
particular, have widely used to examine contemporary real-life situations yin, (2003) [32] and
that methodology has been used in this paper. This study mainly depends upon secondary
information and data; however subject specialists and experts have also been consulted as
trade analysis has a relatively complex terminology. Different experts analyze it differently
according to needs and objectives.
Literature Review
A wide range of theoretical articles, working papers have studied the incentive to calculate
Pakistan’s gains and obstacles in FTA with other nations. Researchers like Yang.J (2006)33,
Tekin-Koru (2010)34, Hartmut et al. (2008)35and so on studied different aspects of industrial
agglomeration in free trade area came up with solution to industrial
agglomeration and imbalance development in free trade area, which has to do with countries
that have large market providing public production in free trade area. Baldwin (2003)36
thought the "shock therapy" should be abridged in the integration. Saqib and Qi (2014)37 put
ahead that every member should apply tactical control to free trade policies. Jiang and Cai
analyzed the status of China-ASEAN trade development and proposed the
countermeasures for the development of China-ASEAN trade. Paul (1991) studied in depth
the integration of European Commission (EU). He thinks that great considerations should be
given to the cost of risk and coordination, as it furthers the development of free trade area and
unifies currency. He also mentioned that the integration of regional economy would inevitably
promote industrial agglomeration and development of imbalance industry; thus the realistic
demands of some member countries cannot be met. Besides, the results of regional economy
integration will increase the costs of risk governance and coordination Paul de Grauwe
(1997)40. Samina and Reema (2007)41 presented paper which attempts to analyze the pros
and cons of forming a Free Trade Agreements with China given the size, formation and trade
patterns of Pakistan’s existing economy. Qi and Muhammad (2014)42explainin recent years,
China has drawn a lot of attention, not only due to its rapid economic development and the
WTO accession, but also due to its active attitude towards regional economic development.

Pakistan top trading partner

Pakistan’s imports usually higher than its exports as mentioned in table, for import
side Pakistan’s top importer is United Arab Emirates with share of US$ 7.75 billion in year
2013. China stood at 2nd with accumulative balance US$ 6.63 billion. China and Pakistan have
entered into a comprehensive plan of “economic corridor” between the two nations. It will
serve as driver for connectivity between South Asia and East Asia. Pakistan’s imports from
Kuwait stood at 3rd position with share of US$ 3.95 billion in the same year. An overall import
of Pakistan remains stable since last 3 years. Pakistan imports mostly consists of mineral fuels,
oil, distillation products, etc from UAE and China are electrical, electronic equipment with
share of 66 percent, machinery, nuclear reactors, boilers, ets stood at 2nd with share of 28
percent in Pakistan’s total imports from China.

REPOTTOR YEARS Products Partners Indicator Indicator

catagories type value
Pakistan 2018 All products China Import 14544.68675
Pakistan 2018 All products UAE Import 8668.637105
Pakistan 2018 All products Saudi Arabia import 3242.3494
Pakistan 2018 All products US import 2946.714822
Pakistan 2018 All products Afghanistan Export 1347.933663
Pakistan 2018 All products Germeny Export 1310.44397
Pakistan 2018 All products UK Export 1728.637317

Imports and exports of china and Pakistan before 2018 were,

Recommendation
Strengthen the trade development of Pakistan-China also with other trading partners. In 2006,
the establishment of Pakistan-China Free Trade Area improved Pakistan-China trade to
increase significantly, demonstrating that the formation of the free trade area has brought the
opportunities for Pakistan-China trade development. Cooperating with China can help Pakistan
get rid of financial difficulties. For Pakistan, the economy external dependence is growing,
strengthening trade links with other nations and strengthening development of Pakistan Free
Trade Area can help Pakistan adapt to economic globalization, enhance the ability to withstand
economic risks and expand Pakistan’s economic cooperation with world.